NEGOTIATION LESSON ONE :
Three steps to effectively prepare for a negotiation
NEGOTIATION LESSON 2 : Distributive negotiation strategies
Strategy 1: Improve your BATNA
► Generate new alternatives– E.g., identify additional sellers with favorable
prices
► Improve value of existing alternatives – E.g., re-negotiate existing offers
► Increase certainty for probabilistic alternatives– E.g., convert “oral
contracts” into
“written contracts;” or get other negotiators to give up their alternatives
Strategy 2: Make an ambitious first offer
► Sets the tone – Frames logic, terms, issues
► Anchors opponent – People insufficiently adjust away from anchors
► Correlates with outcomes – Explains up to 50% of outcome variance
► Make it as extreme as you can justify– Select advantageous reference points
(e.g., past
sales, competitors, reports)
►Talk about your offer as long as possible– Increases anchoring effect
of your offer
When not to move first?
If you can’t get information about the bargaining zone
If it’s inappropriate/ impossible to do so
In auctions (go last!)
Strategy 3: Make precise offers
Negotiators who made precise offers did better than those who
made round offers
Strategy 4: Decreasing concessions
► The nature and pattern of concessions send a signal
► Some dealmakers use a 25-10-5 model
► Starting with ambitious offer provides room for concessions
Strategy 5: Using qualitative anchors
Distributive negotiations
▪ Opposing preferences; try to maximize your slice!
▪ But let the other party win something too!
▪ Only reveal strong BATNA but never your reservation price!
NEGOTIATION LESSON 3 : Integrative Negotiations
Strategies to help you create value
Strategy 1: In integrative negotiations, make late first offers
► Waiting to make a first offer facilitates the discovery of creative agreements
► Reduces early focus on positions and leaves flexibility to discuss interests
first
► Allows for greater information exchange between parties
Strategy 2: Take the other side’s perspective
Strategy 3a: Being likeable and vulnerable
Being likeable ► Focus on things that you have in common (i.e.,
similarities)Being vulnerable
► Reveal small pieces of information and see whether counterpart
reciprocates
► Never reveal your reservation price
Negotiators who mimicked their counterpart were more likely to
reach a deal
Strategy 4: Ask questions
What should I ask about? E.g.,
► Why is this important to you?
► How would this help you?
► Are there other options to achieve this?
Benefits of asking questions
► Reveals priorities
► Increases liking
Strategy 5: Use contingency contracts
If-then agreement that states: which actions under certain
conditions will result in specific outcomes
Advantages: Allows for agreement even if different expectations
NEGOTIATION LESSON 4 : Complex Negotiations
Strategy 1: Logrolling
Trade-off process taking advantage of the fact that different issues
have different values to each party Loss in some issues is traded for
gain in others, resulting in larger overall gain for all parties
Strategy 2: Post-settlement settlement
1. Solidify achieved deal– E.g., contract
2. Explore other deals that would make at least one party better off
without making the other one worse off
3. Modify settlement if it could be improved
Strategy 3: Multiple Equivalent Simultaneous Offers (MESOs)
Why make MESOs?
► Claim value by anchoring opponent
► Signals flexibility
► Provides information about counterpart’s preferences
► Allows you to make concessions that are cheap to you
Strategy 4: Scoring system = a way to quantify possible outcomes in
terms of satisfaction and utility
► Helps you internalize what you really care about
► If people don’t do this, they tend to focus on whatever issue is
most salient (e.g., price)
► Create scores that could allow someone else to go in and negotiate
effectively on your behalf